Firstcry IPO Analysis

Company Details ??

The company was launched in 2010. It is India’s largest multi-channel retailing platform for Mothers, Babies and Kids products regarding Gross Merchandise Value (GMV) in FY24. The company has a presence in both domestic and selected international markets.?

In India, the company sells products through our online platform, company-owned modern stores, franchisee-owned modern stores and general trade retail distribution.

Regarding the international market, the company expanded to the United Arab Emirates (UAE) in Oct’19 and the Kingdom of Saudi Arabia (KSA) in Aug’22. The company operates through an online platform in the international markets.

Key Business Segments ??

1) Multi-Channel Segment:

The multi-channel retailing platform includes Firstcry’s online platform accessible through the mobile application and website, FirstCry modern stores comprising franchisee-owned, franchisee-operated modern stores, company-owned and company-operated modern stores as well as general trade retail distribution.

The company offers more than 1.65 million SKUs from 7,580 brands, including third-party Indian brands, global brands, and the company’s home brands.

The company has 4 key home brands:

?? Babyhug

?? Pine Kids

?? Cutewalk by Babyhug

?? Babyoye

The manufacturing of home brands is primarily carried out by various contract manufacturers as per the company’s design requirements and specifications.

Home brand products are available in more than 160,842 third-party stores in India through the retail distribution network covering 567 distributors and over 1,312 sub-distributors across 1,164 cities.

The company also addresses other essential parenting needs, i.e., access to a parenting community with useful and relevant content about babies and children on its platform. The platform provides comprehensive content and tips across the parenting journey, including insights and assistance across key parenting topics, delivered in a personalised manner to young parents.

It contributes 69.64% to the overall revenue.

2) International Market:

In the UAE and KSA, the company offers products in various categories, including apparel, footwear, baby gear, diapers, toys, etc. It has more than 273,000 SKUs from over 3,600 brands including global brands, the company’s home brands and third-party Indian brands.

The company is the largest specialist online Mothers, Babies and Kids Product retail platforms in UAE products regarding GMV in FY24.

It contributes 11.46% to the overall revenue.

3) Globalbees House of Brands:

Established in 2021 to create a digital-first platform for helping D2C Indian and global brands grow their business in India across online platforms and modern stores. Through Globalbees Brands, the company makes strategic investments in and acquires D2C brands.

As of Mar’24, the company operates 74 brands and offers over 2,18,000+ SKUs across 16 marketplaces.

It contributes 18.39% to the overall revenue.

Key Metrics ??

?? There are 9.11 mn annual unique transacting customers. Collectively, they purchased items having a GMV of ?9,121 crores.

?? 35.85 mn orders were served by the company, having an Average Order Value (AOV) of ?2,544.

?? GMV from Online and Offline is bifurcated as 80.8% and 19.2% respectively.

?? There are 0.43 mn annual unique transacting customers in the international market who have placed 1.79 mn orders with an AOV of ?8,582.?

Financials ??

The revenue from operations growth has been impressive. It grew by 2.7x in just 2 years from ?2,401 crores in FY22 to ?6,481 crores in FY24.

The company is operating at an Adjusted EBITDA profit margin of 4-5% for the past 3 years. However, it is still not profitable at a net level. The net losses increased from ?79 crores in FY22 to ?322 crores in FY24.

There has been a significant improvement in the net working capital days. It has been reduced from 102 days in FY22 to 53 days in FY24.

The Indian and International businesses contribute 88.14% and 11.86% respectively to the overall revenue.

Valuation and Selling Shareholders ??

The company is priced at ~$2.9bn. In 2023, the shares were exchanged hands at ?487.44, which is ~5% above the current issue price.

There are a lot of individual selling shareholders like Mr Supam Maheshwari (MD & CEO), Mr Sanket Hattimattur (ED & CoS), etc. along with prominent VC funds and Corporate selling shareholders.

Supam and Sanket would be making 232x on their investments while institutional and corporate investors would make around 1.5-6x on their investments.

IPO Details ??

IPO Lot Size ??

IPO OBJECTIVES ??

1) ?299.6 crores will be invested in Digital Age (subsidiary) for setting up new modern stores and lease payments of existing modern stores.

2) ?155.6 crores will be invested in Firstcry Trading (subsidiary) for overseas expansion.

3) ?169 crores will be invested in Globalbees Brands (subsidiary) towards acquiring additional stakes in our step-down subsidiaries.

4) ?200 crores will go towards sales and marketing initiatives.

5) ?108.1 crores will be invested in setting up new modern stores under the ‘BabyHug’ brand.

6) The rest of the money will go towards lease payments, technology costs, funding inorganic growth, and general corporate purposes.